The fund joins more than $2 billion in local private equity fund-raising efforts under way or planned for this year (CRAIN'S, Nov. 13).

DN Partners is a reunion of sorts for Messrs. Dancewicz and Nomitch, who met more than 20 years ago at Harvard Business School and worked together at Continental Bank (now Bank of America Illinois), where Mr. Dancewicz started a U.S. investment banking group.

Mr. Dancewicz, 46, headed Bear Stearns' Midwest investment banking practice for 13 years before stepping down early last year.

Mr. Nomitch, 47, worked in Salomon Bros.' local corporate finance group for five years, before joining Lehman in 1992. He left in late 1994, after Wasserstein Perella & Co. banker Scott Mohr was named head of the Chicago office.

Says Mr. Nomitch, "We're harvesting a lot of what's seeded."

Despite their extensive M&A advisory experience, both are new to the competitive buyout arena.

"Institutions that invest in these funds prefer to see the people running them having done deals directly as owners," says Steven Galante, publisher of The Private Equity Analyst, a Wellesley, Mass.-based industry newsletter.

Mr. Dancewicz notes that he and his partner have significant experience working with chief executives and corporate directors.

"We have very extensive Rolodexes of people that we have helped to make a lot of money," he says.

Still, the two men face stiff competition for attractive investments from private equity funds, which raised a record $28.1 billion last year.

"There is money on every street corner," says Rodney Goldstein, managing partner of Frontenac Co., a Chicago-based venture capital and buyout group. "Having the capital will not mandate that they will be successful. They will have to find ways to differentiate themselves."

Messrs. Dancewicz and Nomitch say they plan to set their fund apart by concentrating on middle-sized Midwest-based companies priced between $40 million and $200 million.

The bankers believe the Midwest is ripe territory because it has a rich base of manufacturing companies, but relatively few locally headquartered buyout firms.

According to Mr. Nomitch, only eight of 127 general leveraged-buyout funds with assets exceeding $100 million are headquartered in the Midwest, representing less than 4% of the capital raised by such funds.

Yet, Midwest companies make up almost a quarter of the country's manufacturing employment base.

Locally based firms frequently have an edge because they can maintain closer personal contact with business owners-often key to attracting private deals.

Messrs. Dancewicz and Nomitch are patterning their effort after firms such as New York-based Blackstone Group L.P. and Hellman & Friedman of San Francisco, which have used their M&A businesses-in which they act as advisers but don't invest in transactions-to help them gain access to investment opportunities.